IFC Masala Bonds

preetkarandhaliwal

Hello people, new to the group. Came across a new article in group discussion about IFC buying PNB Housing Finance Ltd green bonds through masala bond money. This happened in April 2016. Bonds worth 500 crores were purchased. Then looked into IFC website and it confirms. So still wont count as public sector investment?
P.S- Because being new to forum still figuring out how to post link. But everyone can google it.

Samvidhan

Indian Railways first in line to raise rupee bonds offshore - http://in.reuters.com/article/india-bonds-irfc-idINKBN0ND0Y220150422

apps24

in this April 2016 IFC report nowhere public is mentioned

preetkarandhaliwal

http://ifcextapps.ifc.org/ifcext\pressroom\ifcpressroom.nsf\0\EACC9D94B3BC863785257F95002FB57E.

preetkarandhaliwal

http://corporateethos.com/public-sector/ifc-invests-rs-200-cr-from-masala-bonds-to-give-pnb-housing-an-edge/

preetkarandhaliwal

Please check these two items. One is news and other is IFC India item. In that check in last para of first section where it says that money invested in PNB Housing was raised through masala bonds. It also further mentions about structuring public private partnerships (although not a conpletely relevant point to context). As far as bonds by NTPC are concerned, all that i read in two days in depth reveals to me that NTPC, Axis bank and HDFC bank are the first few indian companies who have started issuing masala bond in international market through london stock exchange. In this role of IFC masala bonds do not come into play. Therefore ntpc issue is different altogether. But the above posted two item (credit for new item goes to a member in the forum) clearly are stating ifc buying green bonds of PNB Housing finance Ltd(PUBLIC) worth 500 crore. Now this might be the only exception till date, but i guess we have one here clearly.

preetkarandhaliwal

Similarly the railways example given above talks about railways themselves using masala bonds in international market. Remember clearly that IFC masala bonds are rated AAA, but here an apprehension has been mentioned about this company being best rated at BBB which will result in interest variation as compared to ifc masala bonds which fetch lower interest due to their stability. The point i want to make is, although different companies have now been allowed to issue masala bonds nad they can be in public sector, but if we are specifically restricting ourselves to ifc masala bonds, then this transaction with PNB is one and only transaction with public sector that i have come across. But i feel one is enough to dismiss claims of exclusivity of private sector.

warrior0602

Similarly the railways example given above talks about railways themselves using masala bonds in international market. Remember clearly that IFC masala bonds are rated AAA, but here an apprehension has been mentioned about this company being best rated at BBB which will result in interest variation as compared to ifc masala bonds which fetch lower interest due to their stability. The point i want to make is, although different companies have now been allowed to issue masala bonds nad they can be in public sector, but if we are specifically restricting ourselves to ifc masala bonds, then this transaction with PNB is one and only transaction with public sector that i have come across. But i feel one is enough to dismiss claims of exclusivity of private sector.

Some other perspectives:
IFC lends via intermediary in some cases:
Suppose a pvt sector company wants to construct green port, town plan etc and it needs fund.
It may approach IFC for fund or IFC wants to fund it because of green project.
It will do via IDFC ( GoI undertaking) giving it fund which will give it to company at different time against fixed milestones planned (can't lend it to public sector companies).

PNB case is lending via intermediary.

preetkarandhaliwal

Just asking for clarification that although above mentioned ifc item nowhere mentions dealing through an intermediary, and whether lending to pnb js not lending to public sector? Going by another logic that a public sector bank uses an intermediary of private sector to borrow money from ifc ( mind the higher interest rates due to indirectly dealing), will be a rather profligate act, as under no circumstances such a transaction will be beneficial. Just to substantiate, if you can attach some proof of some intermediary involved in the abovementioned transaction. For 3 days i believed it was just private, as the site and mandate itself speaks, until i stumbled upon this.

warrior0602

Same news of link will say money will be used for funding green housing project.

2ndly pnb housing case is ppp case (51% pnb stake which will lower after ipo).
employee can be recruited from pvt sector .

UPSC answer key will make it clear.